Making An Offer
Once you have found the perfect property, you need to decide how are going to offer for it. You might be tempted to put in a higher offer in order to be confident of success. On the other hand, what’s the harm in starting off low and increasing the offer if you get rejected. There are lots of things to think about when making an offer on a house and here are some of the most important. We want you to get your dream home at the best possible price.
Things To Consider Before Making The Offer
- When you first approach the Estate Agent don’t appear too eager when you have found the property you love. Don’t necessarily disclose the full amount you are willing to spend. Maintain an air of mystery, though this is not to say appear disinterested. Just don’t give too much away. Estate agents often show you homes that are slightly above your budget anyway and going in with this frame of mind will put you in a stronger position when it comes to negotiation.
- Upon viewing your dream home, again, do not disclose your interest in an extreme fashion. This would incline the seller to hold out for a higher price as they will expect you to be willing to pay up for the property you are desperate to live in. Remain cool and ask pertinent questions that will demonstrate what a good buyer you would be.
- Keep a close eye on the property market. Keep track of how much similar properties in the area are selling for. Also make not of how quickly they sell. If the market is particularly slow and sold prices are pretty under what is being asked, you are in a stronger position to negotiate a good price.
- When viewing the property, enquire as to which fixtures and fittings will be included. Of course, nothing is set in stone until certain forms are submitted to the solicitor stating exactly what will be left and what will not. Discussing it up front reduces the chance of disappointments later on.
How do I put in an offer?
- Visit or call the estate agent and inform them of how much you would like to offer for a property. Estate agents are bound by law to pass on every offer they receive to the seller. They must do this however ludicrous the offer may be. It is very common for buyers to start the ball rolling with a particularly low offer and work their way up.
- If you make a verbal offer you might want to follow this up with an email so you have it documented that an offer was made at a certain time on a certain day. This protects your rights if there are disagreements later on in the process/ if the Estate Agent doesn’t do their job properly.
- If the seller entertains your offer, they may initiate a negotiation. All negotiations are conducted through the estate agent. Remember, the agent negotiates prices on behalf of their clients for a living and is interested in getting them the best price possible. Always keep this in mind.
When would I put in a low offer?
Whilst you are desperate to get hold of your new home for the best price possible, the seller is eager to sell for a particular amount. Sometimes they will only be able to move into their new dream home if their current sale goes through for a certain amount. So there is a lot to think about and getting it right will take a certain amount of negotiation. There are particular circumstances that can work in your favour though. Here are the main instances where a lower offer might be more likely to be entertained:
- If the house has been on the market for a long time. If this is the case it would suggest they are having problems selling. Maybe other people think it is overpriced. It might be worth asking if the asking price has dropped since it was put on the market?
- If the seller wants a quick sale. The sellers might be desperate to secure their own offer on a specific new house. If they are in a chain they will need to sell before their offer is accepted. Alternatively, they might be relocating and need to have moved by a certain date. There are numerous circumstances where the urgency of sale can affect the sale price of a property.
- Lack of interest. Maybe you are the only person who has expressed interest in the property. You might be the only hope of it selling any time soon.
- If you are in a good position. If you are able to prove that you can act quickly you are an attractive option for sellers. Similarly, if you are a more certain buyer (maybe a cash buyer or your current property has already sold) a lower offer might be entertained. Sellers are put off by long chains and complicated circumstances. If you appear unreliable, the seller will be less interested in you.
- First time buyers. As a first time buyer you will not be in a chain. The seller will not have to wait for you to sell a property before you can buy theirs. This appears less risky to sellers and they will be more confident of a quick and easy transaction.
- If the estate agent is keen to sell quickly. Although the agent works for the seller and should be seeking the best possible price for them, they might be eager to just sell as many properties as they can and collect the commission. Maybe they have targets to reach or figures to balance. A quick sale without too much effort is sometimes the driving force of particular agents.
- If the seller is using multiple agents. If the seller is advertising their property with more than one agent, they are more likely to accept a lower price to guarantee the commission as anyone could sell it at any time.
Before entering into negotiations decide on exactly how much you want to spend. If you work it out carefully enough you should really think hard before exceeding that limit. Do not forget the extra costs of buying a property.
- Start low. Many say to offer around 5% to 10% lower than the asking price.
- Sellers will anticipate this and sometimes put their house on the market for more to accommodate this.
- The agent should tell you of any bids that are higher than yours. This gives you a chance to offer subsequent higher bids.
- You should only offer more than the asking price if you know the seller has already been offered that. Only do this if you really believe you would be losing your once-in-a-lifetime dream home.
- Don’t show your hand too early. Never appear too keen.
- Don’t be blindsided by extras included the deal. Often these extras are not as great as they first appear.
- Bidding via sealed bids means you write down your offer and seal it in an envelope. You then give it to the estate agent who gives all bids to the seller. The seller will usually choose the highest.
- This system is designed to get a high price.
- In high value areas such as London and the surrounding counties, sealed bids have become standard.
- Remember always to stick to your budget or your mortgage company may not offer you enough money to pay for what you offer.
Do I Need A Solicitor To Make An Offer On A House?
In England and Wales, you do not need a solicitor to make an offer on a house. In Scotland you will need a solicitor before making an offer on a property. In Scotland, solicitors are responsible for putting in the offer, negotiating the price and overseeing the contract as well as organising the transfer of the Title and money.
When you have found a property you want to buy, your solicitor will register a ‘note of interest’ with the seller’s agent. This informs them that you are interested and want to be kept advised of a closing date to submit offers.
Some sellers insist on a small amount of cash to accompany their offer, known as a “holding deposit”. This is to show that they are serious about the offer and willing to put their money where their mouth is. Sometimes it is refundable whoever pulls out. Sometimes it is non-refundable the buyer pulls out, but will be refunded if the seller pulls out. Sometimes it is not refundable at all.
After your offer has been accepted
Offers are not legally binding on either side (in England and Wales only). Until exchange of contracts either party can still pull out.
There is also a chance you could be gazumped – another buyer could come along and offer a higher price. This is more likely if your offer is on the low side. This can lose you a lot of money if you have already had a survey done and searches carried out.
Once your offer has been accepted, ask the seller to take the property off the market. They do not have to but it shows they are committed to the purchase. If they refuse, ask why they are still marketing their property.
Once your offer has been accepted, it is time to appoint a conveyancing solicitor. Conveyancing Store is the place to compare quotes from lender panel solicitors. Find yourself a local conveyancing solicitor here.